Wednesday, January 04, 2017
8:55:20 PM EDT

Bears Baffled

by
Jim Brown

The markets rebounded to resistance completely baffling those who expected a sudden decline in January. The first two days of January are part of the Santa Rally period because of the end of year retirement fund inflows. The majority of that money has now been invested. We still need to wait another day or two to see if this is just a fund flow event or something that can continue. There is no compelling need to be long the market. There is always another buying opportunity in the future.

I went through my list of potential plays and there was nothing that simply had to be played today. There were two kinds of charts. Some small caps had 5% to 10% spikes over the last two days and took themselves out of contention for a new play in an overextended market. The second type was the S&P-500 clone. Like the chart below they had rallied back to resistance but then stalled.

I know it is boring not to have any new plays but we need to be patient. When the market does not move in the expected direction, a lot of people begin to get nervous and I am sure we are seeing some short covering from those impatient shorts. I am not going to recommend anything for Thursday because 2017 is only 2-days old. There is no "must trade by date" and we need to be patient.
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